2007年7月13日星期五

This article talks about the US' trade deficit, which is the difference between imports and exports in the US' trade, is at the second highest level this year. This is due to the raise in oil prices and strong demand for Chinese products.

The reason that the US constantly has a high trade deficit may be because of a weak Chinese currency, which would make Chinese goods seem relatively cheaper. Chinese-made goods also have much lower costs compared to US-made goods, due to low labor costs. Also, oil has an inelastic demand, so when the price goes up, the quantity demanded wouldn't change much, therefore the total value of oil imported increases.

2007年7月11日星期三

The article talks about wealthy countries in Western Europe are giving aid to developing countries in Africa, for them to grow crops that can be used to produce biofuels.

I think this shows how trade can benefit both sides. The Western countries can benefit from having a new source of crops they can use to produce biofuels, therefore lowering the price of biofuels, and making them less dependent on fossil fuels. The African countries can have more employment and improve their own economy.

2007年5月16日星期三

This article talks about the raising energy costs is increasing the US' inflation rate. When the costs of production in an economy goes up, the aggregate supply curve shifts in, since resource costs is a determinant of supply. When the aggregate supply curve shift in, with the aggregate demand curve staying the same, GDP would decrease and price level would increase. Since energy is essential in the production of almost all goods and services, it has a significant impact on the aggregate supply, therefore the inflation rate.

2007年5月14日星期一

7.The full-employment budget measures the country's deficit or surplus if the economy reached the full-employment level of GDP with current Fiscal Policypolicies. It is used to determine whether a government is engaging in expansionary or contractionary policy. A deflect or surplus in the actual budget when the full employment budget is balanced is a result of the economy not running at full employment.If full employment was at GDP3, then there would be a full employment budget surplus. Even though the actual budget has no deficit at GDP2, the fiscal policy is contractionary. The government should cut taxes or increase spendings. The g line should be raised or the T line should be lowered so they intersect at GDP3.

2007年5月6日星期日

1. Weigh the two arguments regarding unemployment in Europe. Is unemployment high because of high because of high natural rates of unemployment or because of deficient aggregated demand?

The reason for Europe's high unemployment rate probably lies between the two arguments. It is probably true that the natural rate of unemployment of Europe, especially Western Europe, is among the highest in the world. This is because of their very generous social benefits and minimum wage, which gives employers very little incentive to employ, and people little incentive to look for jobs. Therefore, 7-11% unemployment could possibly already be full employment for Europe. The second argument could also hold partly true, high interest rates and other government monetary policies could have kept aggregate demand relatively low. These two factors combined gave Europe high unemployment rates.